Revenue Assessment of Goods and Services Tax (GST) in India
Publication dateJul, 2022
DetailsNIPFP Working Paper No. 385
Indian GST completes five years on 30 June 2022. Revenue assessment is important to assess the success of GST in protecting revenues of the Union as well as state governments. By compiling comparable revenue streams for pre- and post-GST regime, we compare the revenue performance of GST for the period 2005-06 to 2021-22RE. Our analysis shows that both the Union and state governments could not reap the benefits of GST in terms of higher revenue mobilization yet. By increasing revenue mobilization from “Non-Shareable Duties” and “Cesses on Commodities” under Union Excise Duties, the Union government could manage the revenue shortfall in GST. The GST compensation (both from the GST compensation fund as well as back-to-back loans from the Centre) helped states to sustain the revenue stream as prevalent prior to introduction of GST. In the post GST compensation regime, some states may face revenue stress. States where dependence on GST compensation (as measured by the share of GST compensation in SGST) as well as the share of SGST in own tax revenue are higher (e.g., Goa, Punjab and Chhattisgarh), they may face relatively higher revenue stress than other states.
Key Words: Revenue assessment, Goods and Services Tax (GST), Revenue protection, GST Compensation, India.
JEL Codes: H20, E62, H26